The Tribune, Chandigarh, India

Abduction in Orissa
Govt must not bend over backwards

THE kidnapping of the District Collector of Malkangiri in Orissa, Mr R. Vineel Krishna, and a junior engineer, Mr Pabitra Majhi, on Wednesday by the Naxalites is highly condemnable. The 31-year-old IAS officer, said to be popular among the tribals, was abducted when he was reviewing a welfare programme. The Naxalites intercepted him and three others, made him write a letter with some conditions for his release and sent back the other two persons. Significantly, the abductions have been condemned in and outside the state. The tribals, in particular, have openly criticised the Naxalites who claim to fight for their rights. Apparently, the Naxalites have synchronised the abductions with Union Home Minister P. Chidambaram’s scheduled video conference with the District Collectors of 60 Naxalite-hit districts. This is the first time that they have kidnapped an IAS officer in Orissa, indicating a possible change of strategy to target senior government officers.

The Naxalites have made several demands for the officers’ release. Top among these are the withdrawal of CRPF and BSF camps across the state, a complete end to the combing operations and the release of hardcore Naxalites such as Sudhakar of the Andhra Orissa Border State Zonal Committee of the CPI (Maoist), Padma, wife of top Naxalite leader A. Hargopal alias Ramakrishna and Ganti Prasadam. Without losing time, the state government has invited the Naxalites for talks and has stopped Operation Greenhunt. It is nobody’s case that it should not make efforts to secure the expeditious release of the two officers. However, while doing so, it should not bow to their unreasonable demands and must enforce its authority to uphold the rule of law at any cost.

In this context, the government would do well to follow the Centre’s anti-hijacking policy formulated last year. To avoid a Kandahar-like hijacking of the Indian Airlines flight in 1999 and the terrorist attack on the World Trade Centre in 2001, the policy provides that no negotiations whatsoever would be held with hijackers. The state government should send a strong message to the Naxalites that it will not succumb to their blackmail and pressure tactics. Simultaneously, it should encourage backchannel communications between social activists, NGOs and the Naxalites to save the officers’ lives. Swami Agnivesh, who secured the release of some abductors in Bihar and Chhattisgarh, and Andhra Pradesh balladeer Vara Vara Rao, have indeed pledged their support to bail out the government.

Spirit of cricket
The World Cup promises rich fare

Zimbabwe President Robert Mugabe wanted everybody in his country to play cricket because he desired that Zimbabwe be known as a “nation of gentlemen”. But while the civilising influence of cricket remains debatable, if not doubtful, cricket in the subcontinent remains more than just a game and generates passion that is often far more potent than religious fervour. Not surprisingly, even as the subcontinent braces for seven hours of live cricket televised every day for the next seven weeks, concerns about security around the World Cup somehow seem to have been relegated into the background. Distributing nearly 50 matches among the three host nations is one of the reasons for the confidence that organisers seem to exude in their ability to fend off desperate elements. Add to this the festive atmosphere and carnival spirit on the eve of the tournament that promises a marathon fiesta, and it becomes easier to appreciate the sense of anticipation. Cricket, associated with commerce, entertainment and national-pride, is a great leveller and a unifying factor in all the countries of the sub-continent, which for the next few weeks will shelve its fear of the future and, instead, will cheer the exploits with the bat and the ball.

The game’s format, schedules, venue and the gaps seem tailor-made to allow one of the host nations, with India as the favourites, to win the championship. While Pakistan is not technically hosting the tournament, following the incident two years ago when the visiting Sri Lankan team was ambushed by terrorists, the team led by Shahid Afridi, too, will be playing in familiar conditions and, along with Sri Lanka, make it even more competitive. The format makes it unlikely for any of the major teams to be relegated before the knock-out stage and with Australia, South Africa and England also boasting of match-winning teams, the contest will hopefully be keen and provide spectators value for their money.

Don Bradman had dwelt on the lyrical quality of cricket, saying there was not that much of a difference between reading poetry and playing the game. John Arlott wrote about the loneliness of the batsman facing a bowler, who is supported by ten fielders. But while cheer leaders, commentators and writers get busy, everybody will be hoping that the spirit of cricket will triumph.

Thought for the Day

Keep the gold and keep the silver, but give us wisdom. — Arabian proverb

ARTICLE

Message from the South
The Congress is digging in its heels
by T.V. Rajeswar

Kerala and Tamil Nadu are due to witness fresh Assembly elections in May. Karnataka’s next Assembly elections are due only in 2013, but this may change depending upon the fast moving political developments there. In Andhra Pradesh, the Assembly elections were last held along with the parliamentary polls in 2009, and both elections will now be held in April 2014.

The merger of the Praja Rajyam Party led by Chiranjeevi has changed the political equations among the various parties in Andhra. Chiranjeevi is an action-oriented actor with a lot of stunt in his popular films. He has acted so far in nearly 150 films in his acting career of nearly 30 years. He has capitalised on the sentiments of the backward class of Kapu in the coastal districts of Andhra Pradesh.

In the southern states, a successful career in films means a sure passage into politics. M.G. Ramachandran of Tamil Nadu was the best example of this southern phenomenon. Born a Malayali, he became a popular hero in Tamil films and was hero-worshipped by large sections of the backward classes in Tamil Nadu. MGR, as he was called, took care to act in such films as showed him as the champion of the poor and the downtrodden, always fighting against the villains and emerging victorious, to the delight of the masses. He teamed up with Jayalalithaa, who became equally popular along with MGR.

To return to Andhra Pradesh, Chiranjeevi had his own illustrious predecessors like N.T. Rama Rao, who after a long career in films, founded the Telugu Desam Party and captured power in his very first political bid in the Assembly elections in 1983. The Telugu Desam was later hijacked by his son-in-law, Chandra Babu Naidu, who remains the leader of the TDP.

The merger of the Praja Rajyam Party of Chiranjeevi in the Congress comes at a time when the grand old national party is buffeted by political uncertainties created by the antics of Jagan Mohan Reddy, son of the late Chief Minister Y.S. Rajasekhara Reddy, also called YSR. YSR was a phenomenon in Andhra politics since he not only captured power in the state after the 2004 and 2009 elections, but also ensured 33 parliamentary seats for the Congress party in the 2009 polls, which enabled the Congress to form the UPA-II government.

Corruption indulged in by YSR was allegedly phenomenal, and since he died in a helicopter crash and left behind a legend, all allegations against him are now forgotten. YSR left behind a colossal financial base for his son Jagan Mohan Reddy, who is said to own a cement factory, a steel factory and a captive iron ore mine, all valued anywhere between Rs 4000 crore and Rs 5000 crore, if not more. Jagan has his own captive newspaper and a TV channel. There is no demand for a CBI enquiry into his sources of wealth so far, but it is bound to arise sooner or later.

Jagan is too ambitious and will not stop short of becoming the Chief Minister of Andhra. He has founded his own political party named after his father — the YSR Party. His blatant bids for chief ministership by manipulating the emotions of the Andhra people over the premature death of his father have been rebuffed by the Congress President. Jagan, however, is determined to show his political power. He went to the extent of demonstrating his strength by bringing his followers to Delhi and holding a demonstration. He claims to have at least 24 MLAs and two MPs on his side. In the event of 24 MLAs voting against the present government in Andhra Pradesh, it will fall since it has a majority of only about nine MLAs in a House of 293.

This explains the importance of the merger of Chiranjeevi’s Praja Rajyam Party, which has 18 MLAs. The Congress in Andhra Pradesh also has the support of the Hyderabad-based MIM party, which has seven MLAs. Jagan’s threat is, therefore, temporarily warded off. After the rebuff he suffered over his ambition of becoming Chief Minister, Jagan resigned his Kadapa parliamentary seat and also persuaded his mother to resign from her Assembly constituency. The byelections are due and as and when these are held, Jagan is most likely to win them. However, this alone may not mean much since the real test will come only in April/May 2014 when the parliamentary and assembly elections are due.

There is also the factor of Telangana which is waiting to explode into a law and order problem sooner or later. After the submission of the Justice Srikrishna report and its publication — it has suggested several options — the Centre is yet to announce what option or options it has chosen. However, indications are that the formation of Telangana is ruled out and what may emerge is a constitutionally guaranteed regional set-up for the Telangana districts. Hyderabad city may become a Union Territory and united Andhra Pradesh by and large may continue.

The Telangana Rashtra Samithi led by K. Chandra Shekhara Rao will not accept this dispensation and widespread disturbance of law and order could be expected in Hyderabad city and several Telangana districts. The Centre is prepared to face the situation.

The Congress Government in the state, with Kiran Kumar Reddy as Chief Minister, is safe for the present. The Andhra Assembly has a strength of 293, the Congress has 156 seats and it can now count upon the 18 MLAs of Chiranjeevi’s Praja Rajyam Party and seven MLAs of the MIM. The Telugu Desam Party has 92 MLAs, the Telangana Rashtra Samithi 10. However, all these parties together with Jagan’s 24 MLAs are not in a position to destabilise the present Congress government in the state. The trial of strength has to wait for the 2014 elections when the Congress will have to face the TDP, the TRS and the newly formed YSR Party, which has a strong following in the Rayalaseema region. By and large, there will be an uneasy peace in Andhra but the Congress government may continue.

In Tamil Nadu, which will go to the polls along with Kerala in May, the DMK-Congress alliance has a strength of 135 members in a House of 235. Negotiations are on for seat sharing, and the Congress is making a determined bid to get a minimum of 60 seats from its present strength of 36. There is also the PMK party of Dr Ramadoss which holds sway over a section of the backward classes and has a strength of 18 MLAs. The PMK is negotiating both with the DMK and the AIADMK and would eventually opt for the party which is most likely to emerge as the majority party.

The other major Dravidian party, the AIADMK led by Jayalalithaa, has 57 MLAs, and certain minor parties like the MDMK are allied with it. Jayalalithaa has been cashing in on MGR’s charisma, but she is unlikely to defeat the DMK-Congress combination. She is hoping to fully exploit the 2G spectrum scam that led to the exit of Raja, who was close to DMK chief Karunanidhi. However, Karunanidhi has claimed that the people in Tamil Nadu are more worried about the high prices than the 2G scam or any other scam. Eventually, the DMK-Congress alliance is most likely to emerge with a majority and enable the DMK to form its ministry again.

That leaves Kerala in the South. The political tradition of Kerala has been such that the CPM-led Left Front and the Congress-led United Democratic Front have been coming to power after alternate elections. In the last assembly elections in 2006, the Left Front emerged successful with 82 MLAs in a House of 141. The Congress secured 24.

The political equation may change and the Congress is making a determined bid to win back the state in the May elections. Congress veterans A.K. Antony, Oommen Chandy and Vayalar Ravi will all be working hard to ensure the party’s success. Prime Minister Manmohan Singh himself will be making a four-day visit to the state. The UDF led by the Congress won a majority of the panchayat elections held in the state recently. The unseating of the CPM-led Left Front in Kerala would be the precursor of the CPM-Left Front government being dethroned by the Trinamool Congrees and Congress combine in West Bengal.

The writer is a former Governor of UP and West Bengal.

MIDDLE

Identity crisis
by Parbina Rashid

MY generation, born during the heyday of the Assam movement and grew up during the ULFA uprising, needn’t have to be told stories about bogeyman to be tucked into bed. We had our own live bogeymen, who came with heavy footsteps and knocked on our doors and, again, those invisible ones who pelted stones on the roof the moment those heavy footfalls receded from the area.

This would happen without fail whenever there was a call to observe ‘blackout’ in the area from some organisation—AASU, ULFA or any organisation worth its name. First would come the Army guys in groups, knocking roughly, forcing us to switch on the lights.

They would, often, ask my parents to produce their I-cards if they dared to protest saying they were government employees and not supporter of any such organisations. Somehow, we were spared from proving our allegiance to the country. Perhaps, they thought we were too young to belong to either side. As soon as the Army men cleared the area, there would come another set of bogeymen. You couldn’t see them, but could feel their presence from the sound of stones on the tin roofs, which meant, ‘switch off your lights’. We felt trapped and helpless.

A lot of water has flowed down the Brahmaputra since then. From shouting slogans ‘We will give our blood but not oil’ on the street to studying in college and university in Delhi to settling down with a North Indian man in the historic city of Patiala, life has changed in all conceivable forms. But the need to prove my identity seems to be haunting me even now.

Recently on my visit to the Taj at Agra, I was stopped at the entrance. “Excuse me madam, we cannot allow you with this ticket. Foreigners have to pay Rs 750 to enter the Taj Mahal,” the security guy told me.

What an irony, I thought. Throughout my formative years, I had heard netas urging the youth of Assam to join the mainstream and here I am in the mainstream, in sickness and health, till- death-do-us-part kind of mainstream, and, yet, I am asked to pay up like a foreigner!

“I am from Chandigarh and you have just allowed my son and my husband to enter with the Rs 20 tickets,” I protested. “Sorry, please show me some residence proof, madam,” The guy was polite but unyielding. Feeling defeated and unwilling to waste any more time arguing with him, I fished out my I-card and showed him. That seemed to satisfy him as he stepped aside to let me enter.

The time has changed, even the tenor of the voice who questioned my identity has changed. But I could hear the faint sound of those heavy footsteps and those of pelting stones once again.

OPED-agriculture

SAVE FARMERS FROM DEBT TRAP
Because of financial institutions' limited reach and procedural hassles, farmers in need of credit turn to commission agents, who charge exorbitant interest rates and resort to land grabbing — and even murder — in case of default. The coming budget should address this issue in earnest
Anita Gill

THE agriculture sector, which supports a majority of the population, requires a serious attention in the forthcoming budget. The misery of debt-ridden farmers across the board is well known and credit policy needs to be more inclusive towards this section.

Farmers' dependence on borrowings has increased as farming is no longer adequately remunerative. Tribune photo Vicky Gharu

The benefits of the Green Revolution have been almost eroded with near stagnant technology, declining productivity and the ever-rising cost of inputs, including credit, coupled with low levels of support prices. The income-expenditure gap is so wide that farmers, especially small and marginal, cannot fulfil even their basic consumption needs, leave aside production needs. Their dependence on borrowings has increased, but they have little repaying capacity as farming is no longer remunerative.

No wonder they are caught in a virtual debt trap. Since the late eighties, they have started choosing death over repayment of debt. Although the problem has been long pending, little has been done to tackle it. Under such circumstances, expectations from policymakers rise as the day of the annual budget draws nearer.

The 2008-09 budget tried to address the issue of agrarian indebtedness by providing a Rs 60,000 crore debt waiver and lowering interest rates on agricultural loans. However, the entire relief package was for institutional debt only and the debt from informal sources was neglected even though it is far more in volume.

Now the Eleventh Plan is well under way with the populist slogan of growth with a human face, that is, inclusive growth, offering an equality of opportunity for all. It is, therefore, pertinent to examine agricultural indebtedness. within this framework. This is especially undertaken for Punjab, the state that was once the most prosperous and is a major contributor to national food security of the country.

WHAT THE 2011-12 BUDGET SHOULD DO
Enlarge the allocation of net bank credit for agriculture and separate direct and indirect advances.
Commission agents should be taken off the list for priority lending.
Raise public expenditure on rural health care, education and irrigation
Minimum support prices should be commensurate with the rising cost of cultivation.
Financial institutions should become more farmer friendly to wean farmers from private lenders.
Increase the supply of farm credit
Lower the interest rates on farm loans.
Bring down the transaction costs, simplify the lending procedures and educate farmers about the nitty-gritty of banking operations.
A debt waiver scheme on the lines of the one announced in the 2008-09 budget should be introduced covering debts from informal sources as well.

Admittedly, the inclusive approach to growth is a wide concept. Here the focus is on financial inclusion of cultivators, big and small, particularly in the case of borrowings from banks for their production needs. If cultivators have to depend on non-institutional sources of finance because of scant avenues from formal sources, this amounts to their financial exclusion.

The 59th round of the NSSO (2005) estimated that 65.4 per cent of farmer households in Punjab were indebted (the all-India figure was 48.6 per cent). Independent surveys by noted economists (Shergill-1997, 2010; Sukhpal Singh -2007) put the figure at much higher levels - close to 90 per cent. In terms of land size no single category of the farm households is free from debt. Although there is a difference of opinion as to which class of farmers is more indebted, there are no two views on the fact that the average outstanding loan per household increased with the increase in land size.

Analysing source-wise indebtedness in Punjab, the NSSO survey indicated that institutional sources accounted for 48 per cent of the loans for all land sizes, while 52 per cent was accredited to non-institutional sources. The position for small and marginal farmers is worse as they have still less access to institutional sources, particularly commission agents (arhtiyas) vis-à-vis commercial and cooperative banks in the credit market.

Hence, it will be a gross exaggeration to say that informal lenders (arhtiyas) are losing their grip on rural life. This firm grip of the arhtiyas is a ramification of contracts involving the inter-linkage of input and output markets with the credit market. This means that in return for loans from commission agents, farmers are forced to not only purchase inputs from, but also sell their crop through commission agents.

The procurement agencies make payments for farmers' produce to commission agents who deduct their loan amount first and then pay the balance to farmers. As a result, farmers receive only a meagre amount -- at times insufficient to meet their basic consumption and production needs. Then another round of borrowing follows. Interest rates vary between 24 per cent and 36 per cent per annum. This is another aspect of exploitative informal lending.

Why do these commission agents enjoy a thriving business? First, they are easy to approach. The simplicity and elasticity of their methods act as a powerful magnet. At present "hassle-free" loans are only for large farmers; poor farmers have to face atrocities like land-grabbing, exorbitant rates of interest and sometimes even death (read murder at the hands of goons of commission agents). The murder of a farmer leader in Mansa in full public view on October 11, 2010, is a very recent example. Such atrocities have become common.

Another reason for the booming business of informal lenders is the credit gap - the difference between demand and supply of credit by formal financial institutions, which is more than 50 per cent for each size of land-holding and that too for production purposes. Who will cover the credit gap then? Informal lenders, of course.

The official (NSSO) as well as independent surveys have established that of the total loans (formal and informal), a major percentage is spent on conventional productive purposes, while a small percentage is spent on loans conventionally labelled as unproductive - education, healthcare, consumption and marriages. The last purpose accounts for less than 10 per cent of the loans in Punjab and 11 per cent countrywide. The State has increasingly withdrawn from public expenditure on rural development, agriculture and allied activities, health, education, irrigation. The decline has been substantial, and as a result, private expenditure on these essential services has increased, causing a further dent in incomes.

Unfortunately, financial institutions are not making much headway in providing succor to farmer households and in making financial services available to them. Punjab is just an example. The situation is the same throughout the country. Public policy has much to answer for in this case. With the introduction of banking sector reforms in 1991 and the subsequent revision of the priority sector list, agriculture has been hit hard. The priority sector now includes new segments and items - in agriculture, for example, acquisition of jeeps, mini buses and vans, loans to commission agents for meeting their working capital requirements on account of credit extended to farmers for the supply of inputs have been added.

While there has been an increase in the ceiling of advances for some other segments in the priority sector, the share of agriculture has been retained at 18 per cent of the net bank credit. Agricultural advances have now been made inclusive of indirect finances. This means that if banks fail to meet the stipulated target of 18 per cent, this can be made up by depositing the shortfall in the Rural Infrastructure Development Fund and even earn a rate of interest. This fund is required for activities, which should ideally be financed through budgetary resources and not by cutting down on finances to be given directly to farmers.

The financial inclusion of small farmers requires serious thought. In Punjab 12 per cent of the small farmers and 5 per cent of the large farmers have left farming with no alternative, gainful employment. The solution is not a one-time institutional debt settlement. The half-hearted attempts to make direct payments to farmers instead of commission agents on the sale of produce are not going to break the strong market inter-linkages between the farmer and the commission agent. The need is to smash the political clout of informal lenders.

For this the coming budget will have to devote considerable attention and resources to agriculture. The financial aspect of the agrarian crisis can be resolved considerably if public policy strives to restore the repaying capacity of farmers and financial institutions put in their bit by becoming a formidable challenge to the commission agents.

Financial inclusion requires a holistic approach and an effective regulatory mechanism. The pressures and compulsions of globalisation have taken their toll in terms of the growing exclusion of a sizeable portion of the population from the development process. A success story in terms of high growth rate without any corresponding pattern of development benefiting rural masses is not only awkward, but questionable as well.

The writer is a Professor of Economics, Department of Distance Education, Punjabi University, Patiala